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Government to Earmark $1.1b for Production of Bio-Fuels

Tuesday July 18, 2006

The government plans to invest an approximate $1.1 billion to develop eight bio-fuel factories and several jatropha and palm oil plantations, as part of a larger initiative to expand the bio-fuel industry, Investor Daily reported (3/7/06), as mentioned in the Trade and Investment News published by the Office of the Coordinating Minister for the Economy.



The proposed factories will produce a total of about 36,000 metric tons of bio-fuel derived from jatropha and palm oil annually, Industry Minister Fahmi Idris said.



The project has dual goals, namely to supply the growing demand for bio-fuel in the country, simultaneously boosting the nation's economy, as stressed earlier by President Susilo Bambang Yudhoyono.



Villagers living around the proposed plantation sites will be encouraged to develop vacant land previously owned by conglomerates, converting these into plantation smallholdings of 1 hectare to 2 hectares, creating jobs and energizing the small-medium enterprise sector. While suitable sites for the processing facilities have yet to be determined, locations in East Nusa Tenggara and West Nusa Tenggara have been earmarked for plantation development, and the government is reviewing several potential sites in other provinces for suitability



The government aims to spur investment in the plantations by providing interest rate concessions on loans to developers and lower tax rates on sales of palm and jatropha oil.